2022 (4) TMI 864 - HC - GST

Revocation of cancellation of the registration of petitioner - non-filing of returns for continuous period of six months - fraud - wilful suppression of facts or not - HELD THAT - The assignment of reasons is imperative in nature and the speaking order doctrine mandates assigning the reason which is the heart and soul of the decision and said reasons must be the result of independent re-appreciation of evidence adduced and documents produced in the case. The respondent authority has failed to extend sufficient opportunity of hearing before passing impugned order, inspite of specific request for adjournment sought for. Even the impugned order is not only non speaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Thus, on all counts the respondent authority has failed to adhered to the aforesaid legal position - there are no hesitation in holding that the basic Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. The Appellate authority ought to have appreciated that the writ applicants at relevant point of time i.e. in year 2017, applied for registration which request was favourably considered by the authorities under the Act with a specific registration number allotted to the writ applicant. It was a transitional phase, whereby the old CST Act was repealed and the new regime of CGST/ GGST has come into force - Unfortunately, information of the returns for certain period not being uploaded, surfaced in the year 2019 and the cause explained suggest that circumstances were beyond the writ applicant's reach. In such peculiar circumstances, it was least expected of the Appellate authority to condone the delay for filing appeal, more so, with the Onset of Pandemic Covid-19, preventing further follow up action. In the peculiar facts and circumstances, the authority ought to have condoned the delay which unfortunately was not done, despite the writ applicant having made a fervent request for condonation of delay in filing appeal seeking revocation of cancellation of registration. On account of procedural lapses, the High Court should not be flooded with writ applications. The procedural aspects should be looked into by the authority concerned very scrupulously and deligently. Why unnecessarily give any dealer a chance to make a complaint before this Court when it could have been easily avoided by the department. All the writ applications deserve to be allowed solely on the ground of violation of principles of natural justice and, accordingly, the writ applications are allowed.

Summary

Issues Involved:

1. Validity and sustainability of the show cause notice and the consequential order canceling GST registration.
2. Adherence to principles of natural justice in the cancellation process.
3. Proper communication and detailing in show cause notices and final orders.
4. Appellate authority's handling of delay in filing appeals and condonation of delay.

Issue-wise Detailed Analysis:

1. Validity and Sustainability of the Show Cause Notice and the Consequential Order Canceling GST Registration:

The court examined whether the show cause notice seeking cancellation of registration and the consequential order canceling registration under the GST Act, 2017, were valid and sustainable in the eye of law. The court found that the show cause notices issued were devoid of specific details and particulars. The notices were vague, merely stating generic reasons like "not filed returns for a continuous period of six months" without elaborating on specifics. This lack of detail made it difficult for the recipients to respond effectively, rendering the cancellation orders unsustainable.

2. Adherence to Principles of Natural Justice in the Cancellation Process:

The court emphasized that the principles of natural justice must be adhered to in the cancellation process. It was noted that the respondent authority failed to extend sufficient opportunity for a hearing before passing the impugned orders. The orders were non-speaking and cryptic, lacking decipherable reasons for cancellation. The court held that the basic principles of natural justice were violated, leading to the quashing of the orders.

3. Proper Communication and Detailing in Show Cause Notices and Final Orders:

The court directed that show cause notices and final orders must contain all necessary details and information to enable the dealer to respond effectively. The court noted that the current practice of issuing vague notices and orders due to technical glitches in the portal was unacceptable. The court mandated that until the technical issues are resolved, the department should issue show cause notices and final orders in physical form, containing all material particulars, and communicate them to the dealer via RPAD (Registered Post with Acknowledgment Due).

4. Appellate Authority's Handling of Delay in Filing Appeals and Condonation of Delay:

The court criticized the appellate authority for mechanically disposing of appeals on the ground of delay without considering the peculiar circumstances of each case. The court highlighted the need for a fair and reasonable opportunity of hearing, especially when the delay was due to genuine reasons such as lack of knowledge of the new tax regime or the impact of the COVID-19 pandemic. The court emphasized that the appellate authority should adopt a more lenient approach in condoning delays to ensure justice.

Conclusion:

The court allowed the writ applications on the ground of violation of principles of natural justice. It quashed the respective show cause notices and consequential orders canceling registration, granting liberty to the respondent to issue fresh notices with detailed reasons and provide a reasonable opportunity of hearing before passing any orders. The court's directions aimed to reduce unnecessary litigation and ensure that the procedural aspects are scrupulously followed by the authorities.